Moody's warns that if oil prices remain high, the probability of the U.S. economy falling into recession will exceed 50%

Mark Zandi, Chief Economist at Moody's Analytics, believes that if the Strait of Hormuz continues to refuse passage for oil tankers and oil prices remain high, the outlook for the U.S. economy will worsen, making it difficult to avoid a recession. Although U.S. oil and natural gas production is currently roughly equal to its consumption, turmoil in the global energy market could still have a significant impact on the U.S. economy.

Mark Zandi stated that even before the outbreak of the conflict in Iran, Moody's analytical model indicated a 49% chance of a recession in the U.S. within the next 12 months. He expects that when the model releases its next data, the recession probability will rise to 50% or even higher.

He believes that the recent weak labor market data is a major factor dragging down the outlook for the U.S. economy, and several economic indicators have also begun to weaken in recent months. Official data shows that U.S. GDP grew only 0.7% in the fourth quarter of last year, indicating a significant slowdown in economic momentum. Analysts point out that the war in Iran further exacerbates economic pressures and could bring a new wave of inflationary shocks to U.S. consumers, who are already facing high price pressures.

Mark Zandi also reminded that historical experience shows that soaring oil prices are often a precursor to economic recessions. Since World War II, every U.S. recession, except for the brief recession caused by the COVID-19 pandemic in 2020, has been accompanied by a significant rise in oil prices